Feds’ third deep-water permit goes to Houston-based ATP *updated*

Houston-based ATP Oil & Gas Corp. won approval today to resume drilling a deep-water well in the Gulf of Mexico that was halted by last year’s ban on some offshore exploration.

The company now will be allowed to continue work on a well at its Telemark Hub about 90 miles south of Venice, La., where drilling began two years ago in 4,000 feet of water. A rig was on location to prepare for installation of a production facility last April — before the lethal blowout of BP’s Macondo well that triggered the administration’s moratorium.

The permit is the first issued for work from a stationary deep-water facility — in this case, the ATP Titan — since last year’s oil spill. By contrast, two other deep-water wells approved in recent weeks are being drilled by mobile offshore drilling units.

The news was hailed by ATP officials, who said the company would begin operations to finalize drilling and completion of the well within the next 24 hours.

“We are ready and eager to return to work,” ATP’s CEO T. Paul Bulmahn said in a statement. “ATP has always drilled safely and environmentally soundly.”

After burrowing 12,000 feet below the sea floor, ATP suspended drilling the well in 2009, in preparation to hook up the Titan drilling and production facility. Now, it expects to drill down to a target depth of 20,000 feet before moving into a production phase.

Production of an estimated 7,000 barrels of oil daily is expected to begin by the end of the second quarter or the early part of the third quarter, said Al Reese Jr., the company’s chief financial officer. The total reserves at the Telemark Hub are estimated at 71.9 million barrels.

ATP will “immediately” begin pursuing a permit for a second well at the site that also was temporarily suspended at 12,000 feet below the sea floor, Reese said.

“Now that we’ve gotten the first permit,” the process of getting the second one approved should be more straightforward, Reese said. “We know what the final pieces of the paper need to look like and (federal regulators) know what they need to look like.”

Michael Bromwich, director of the Bureau of Ocean Energy Management, Regulation and Enforcement, said in a statement that “this permit approval demonstrates that deep-water drilling can and will continue in the Gulf of Mexico provided that operators have successfully demonstrated their ability to operate safely.”

But some oil industry advocates weren’t that optimistic.

“While every permit is welcome,” said American Petroleum Institute spokesman Reid Porter, “we remain well short of a clear and efficient approval process for getting Americans back to work in the Gulf.”

Like all deep-water drilling, the ATP project had to satisfy new safety and environmental mandates imposed since last year’s spill. The company also had to prove it could swiftly contain a runaway well.

To satisfy that containment requirement, ATP has contracted with the Houston-based Helix Well Containment Group to use its equipment and contracted vessels to capture oil in case of a blowout at the site. A second operation, the Exxon Mobil-led Marine Well Containment Company, also is offering equipment to help trap crude at deep-water blowouts.

ATP’s approval was telegraphed by Bromwich on Thursday, when he told a House Appropriations subcommittee that “several additional permits” for deep-water were coming soon.

So far, the agency has focused first on restarting the 57 deep-water drilling projects that already were approved before last year’s spill – including 16 on which drilling had begun. The ATP project was part of that grouping, which face fewer hurdles to restarting than newly proposed drilling projects,

Industry analysts and representatives say the bigger test is what happens to new drilling proposals, which are subjected to heightened environmental reviews.

Offshore contractors also say a trickle of permits for previously approved work won’t keep their vessels, crews and equipment busy.

Interior Secretary Ken Salazar “is treating Gulf workers like peasants, tossing us work crumb by crumb and expecting us to be grateful,” said Jim Adams, president of the Offshore Marine Service Association. “We’re tired of fighting for scraps. We want to get back to work — all of us, not just a handful of crews.”

“Energy producers don’t have a clear picture of what it takes — or how long it takes — to satisfy Secretary Salazar,” Adams added.

Two other companies recently nabbed permits to resume work that was stopped by last year’s deep-water drilling ban. On Feb. 28, Noble Energy got the okay to drill a bypass well in its Santiago prospect 70 miles southeast of Venice. And on March 11, the ocean energy bureau approved a BHP Billiton deep-water well in its Shenzi prospect, approximately 120 miles off the Louisiana coastline.